Query Desk

This is a limited access to the Query Desk, where we share some of the Queries we have answered. These are not recommendations, but a casual chat between a client and the research analyst team.

Client 21, Feb 20

Subject: new to stallion hi

Recently added to stallion family  and looking forward to gain some good insights , just wanted to know about few stocks like , what is happening with yes bank , can we see a probable buyer and can the stock be accumalated at below 35 level??

second ruchi soya is one stock which i was keen into , your views on the same , another is FCEL and also Rcomm.



Admin Reply 16, Mar 20

Hi Sir,

Welcome to the Stallion Family, I strongly recommend you to spend a week/month to read the Query desk, Its a Great platform created by the Stallion Family over last many years & i am sure you will be able to answer if you should Invest in Yes Bank, Future Consumer, Ruchi Soya & Rcom!


I could have easily answered this Question in one word, but i really want you to learn the Stallion way because you would never be able to invest big money if you don't understand our style well!

Client 21, Feb 20

Subject: Corona virus in italy

Hi Amit,

Corona Virus has reached Italy, the markets are selling off hard, is there a possible of this becoming big

Admin Reply 16, Mar 20

Hi Sir,

Darr ke aage jeet hai, We will have to survive this Crisis, i Can tell you before corona 90% of the Market was in a Bear Market, today about 95% of the Markets have come in the Bear Market.. I have seen that cash calls dont work well, Atleast i dont know anyone who can consistently beaten the Market taking cash calls...


I wanted to hedge myself out of this situation, I knew i couldnt time this but i wanted to reduce volatility, Unfornately we screwed up on Execution as  because the VIX on Options was at 30 & buying options was a really risky strategy.. I wont say i want to make money doing options but i really wanted to protect my Gains of 2019 at 2-3% Cost, the cost went up higher to 4% & i wasnt ready to pay up 4%...

Look at the Above chart, typically Markets take 50-90 days to correct 20% but this time the S&P 500 corrected 20% in 14 days, i wanted to short when the Market has a Short covering rally & the VIX would collapse to 18 but we never got short covering bounce or a retracement unfortunately.. 


In markets we have be to prepared to see the Unknown, its was a tough time to make a Decision that markets would fall 20% in a Straight line, Koi Nahi we will get through this as well!

Client 18, Feb 20

Subject: Investing in non Indian stocks

Hi Amit, 

With an non investor friendly govt announcements , slowing growth and corporate governance issues ,long term investing only in Indian market seems less enticing. 


With new rule which allows investors to invest upto 250,000 usd to be invested outside India and new platforms like vested, green tiger which enables it, do you think it's possible to have some part of our multibagger portfolio or even a new service which would have recos from US markets? 

I am asking this since I know you actively track US market and you seem to agree that its one of the best markers to invest. 

Admin Reply 16, Mar 20

HI Sir,

Well over time you will realize that our Job is

1) Catch the Trend

2) Cut Loosers

3) Ride Winners

4) Manage the Risk!


Trends are everywhere & our Job is to make money whereever there is an Opportunity... All long as we follow the Rules of the game we will do well in all markets.. We ofcourse need to be careful about the Risk today in the Global markets which i explained on the PPT Yesterday.. (Keep this Chart in Your Head for next 2 Months), I am an optimistic but we still have to manage our risks.. 


To your Question on USA Stocks in Multibagger - We wouldnt be able to Include the USA Stocks in the Multibagger portfolio, I wish we could but i am already tired of the Regulatory things in India, there are 50000 laws in India, I cant take more headaches.. 


A Investor Should be Diversified in Multiple Asset Classes like Gold, Fixed Income, Stallion Portfolio, Commercial Real Estate, International Equities!

Client 28, Oct 19

Subject: Ion Exchange and Hindustan Foods

Dear Amit

What is your take on Hindustan Foods and Ion Exchange? both are small-cap growth stocks with RK Damani and Jhunhunwala as investors respectively 

Dmart has already started sourcing FMCG products form HFL.

Please advise


Anil Goel

Admin Reply 05, Nov 19

Hi there 


Hindustan Foods is really scaling up well. It has added manufacturing units Left, right and centre. And, it's definitely a good short-term trend to be into. But, one big thing we have learnt in this space, the contract manufacturing guys do not make much money over a longer horizon. 


Let me explain to you how. Ideally, we want to be invested into companies, where we are making the money now, when we are invested and getting the full benefit of cash flows my company is making now. But, the problem in contract manufacturing companies, as an owner I can only make money when I will actually sell my business. Because as an owner, so much of the company’s capital is invested in the operations, be it through working capital and manufacturing facilities.I do believe, this is a little confusing statement. 


The idea here is that as a contract manufacturer, my scale has to be extremely large thus the capexes are done every year for the company. The Free cash flow continues to stay negative for a long time. In a bad time, the large customers (MNCs in this case) will put pressure on the contract manufacturers to take working capital risk (be it through increasing inventories, increasing receivable cycle and stretching the payables), and in fear to not lose a contract with such large marquee customers, the contract manufacturers will take this short term pain, which eventually turns into a longer term pain. 


I believe any value creation will only take when you will be able to place more cash flows with the existing shareholders. This is already visible in some of our own MNC FMCG players, where the growth in Cash Flows was larger than the growth in revenue growth, which led to much higher market caps.



Let me give you one more iteration of how the marquee clients of Contract manufacturers create more value. I am comparing Apple and Hon Hai Precision Tech (Foxconn), the largest contract manufacturer for Apple products.


Apple created more value from one of its successful product- Iphone 5, than its manufacturer Foxconn. Iphone 5 was launched in 2012, the picture represents a timeframe from 2012-present. (Yellow is Apple, Blue is Foxconn)


We can definitely play short term opportunities here, but not the larger trends.


Unfortunately,  I am not tracking ION Exchange very closely, but as far as i can recall, the large growth in the first half was driven by its EPC segment, which is a pure-play project business.


Client 24, Oct 19

Subject: momentum vs multibagger for me

Please list difference between momentum vs multibagger. 

I see atleast 4 times a day my portfolio during market hours. What suits me ? Is it momentum or multibagger.

Kindly eleoborate what kind of peole should opt momentum, multibagger. Which suits whom better. 

How come both can give adantage?


Admin Reply 19, Nov 19

Hi Sir,

These are Past Performance of 3 Products till 31 October 2019

1) PMS Since Inception (This is SEBI Data & Net of Fees)

2) Advisory since 2013 till march 2016, Then Combined it with Multibagger Portfolio.

3) Multibagger Advisory from April 2016

4) Momentum since Inception in December 2017


All 3 of our Products are Fantastic, Momentum, Multibagger & PMS.. I had written already which product is for whom last week.. 

Client 07, Oct 19

Subject: What % Allocation should be towards Equities

Hi amit,

I have three questions, I am 45 & make about 1.2 Lakh a month, i run a tiles retail store & have stocks worth 7lakh in the stallion portfolio, i save 3-4 lakhs a year net of home expenses. I am try to cut expenses and save more to invest in stallion to reach my goal of 2 crores when i am 60 year old. Can i add more Capital now, is this a bull market? 


Which Companies in the Portfolio will Create most Wealth in next 5 Years?


What is the biggest Risk in Stallion? 

Admin Reply 02, Nov 19

Hi Sir,

Rule Number 1 = Focus on Making more money than on Saving.. There is way too many things people writing & say about saving but very less is written about making more money..  Indians have nailed it on the Saving money side but unfortunately we have been weak in the Making money side.. Every Person you speak to will give you tips on saving money, A Penny Saved is JUST A PENNY SAVED, Making More is our Goal.. 


Invested Capital * Returns * Duration of Investment * Understanding of Stallion = Returns Earned using Stallion.. (Understanding of Stallion is Important)


I believe You will reach 5-7 Crores easily if you focus on Increasing Invested Capital & Understanding of Stallion Philosophy.. The Consistent Returns is my Job & your Duration of 15 years is great.. 


Question 2 - If this is a Bull Market?

Jesse Livermore Said - "Nobody should be puzzled as to whether a market is a bull or a bear market after it fairly starts. The trend is evident to a man who has an open mind and reasonably clear sight, for it is never wise for a speculator to fit his facts to his theories." -


The Screen Tells me we have started a Swatch Bharat Bull Market as i said in my Monthly Newsletter last Month, I believe a lot of People will focus on Low Quality Value Stocks (Media Ofcourse will Keep Calling the Trend Expensive) but for next 2 Years the First Filter has to be Corporate Governance & then Growth!


Question 3 - I Believe Stallion has a very sound & Great strategy but in Stock market the Biggest enemy of is human nature i.e. Our Own Emotions. We Must have an Open Mind & be Flexible & be 100% Focussed on the game!


Client 06, Oct 19

Subject: Any thought on IRCTC

Hi Sirji,

I have seen stallion giving rational and its view on almost every active stock. Would like to know about IRCTC and whats your thought after its listing.

Admin Reply 07, Oct 19

Hi Sir 


Let me give a title here. Please stick around, its going to be a long one, trust me but its worth it!

A Forced, Profitable, Scalable Monopoly!


Lets start with some context; before we delve in for the main Game!


IRCTC started around 1998-99, with a view to serve Railways in Online ticket servicing and Catering to the premier trains. 


It has broadly 4 businesses

  1. Catering

  2. Packaged Bottles

  3. Travel & Tourism

  4. Internet Ticketing.


Segment (FY19)

% of Revenues % of PBT
Catering 52% 39%
Packaged Bottles 9% 7%
Travel & Tourism 23% 17%
Internet Ticketing 12% 38%
Total 1875 crores 420 crores


Now, why is suddenly everyone gung-ho about the IPO?

Its offered at about 2.7x Market cap to sales, 19x earnings, very steady business, large opportunity size - actually no, we have the deepest penetration for railways in the world, so whats the bloody change ? Why so high Grey market premiums and such large subscriptions?


Remember November 2016, the Demonetization bullet hit our country !

  • - Hard currency was wiped out in the country, Government wanted to encourage people with cash-less transactions. This is the time when “Paytm Kar” jingle went viral. This is also the time people have booked the longest distance train in First Class segment through physical Ticket Windows, to stuff the cash and get it back as refunds after ticket cancellations, a kick-ass way to do Black-to-White, but a very small quantum. 
  • - Govt. ordered Indian Railways to waive off service charges on Long Journey Rail tickets booked online so as to encourage cashless transactions in hard-currency starved country. 


Where was this waive-off burden taken ?

  • - You guessed it right, its IRCTC! In one shot, you take away 500+ crores revenues from IRCTC and reimburse it with paltry 80 crores annually. IRCTC took this heavy-weight losses for 2 years. Though, the topline got compensated with 2017 Monopolizing Catering policy. I do believe this was just to lessen the burden of Ticketing revenues losses, can this catering monopoly reverse, yes it can ! (only after the main game is active and steady, read on…)


Now the main game!

  • - Indian Railways announced that it would allow IRCTC to collect service charges again from 1st September, 2019. So, now 500+ crores lost after demonetization will come back to Topline, actually a little more. Its because, people booking tickets online have gone up 40-50% in the last 2 years. 20 crore tickets were booked online annually before demonetization and about 30 crores tickets will be booked online in FY20, and believe me its a large change. Though this impact will be offset by decline in service charges. (From 40 Rs./ticket to 30 Rs./ticket for AC Coaches and from 20 Rs./ticket to 15 Rs./ticket for Non-AC Tickets) But still a very big big Delta!


Lets understand it through the numbers, to give you a better perspective.


1.How many tickets will be sold through the IRCTC platform?

  • - We expect anywhere between 30-32 crore tickets annually.


2.What is the average realization we expect from service charge per ticket?

  • - We expect anywhere between 21-22 Rs. per ticket. Why this figure though? Its because the average realization before demonetization was about 28 Rs. per ticket, and now you index it with the new range, it comes to 21-22 Rupees. 


3.Lets do the Math!

  • - What is the topline I am adding here? About 630-700 crores to the topline. Now, lets recollect how much Internet ticketing revenues were booked for the year, it was about 230-240 crores.

  • - So now, you have 235 crores (existing topline) + 650 crores (new topline, because of service charges) - 88 crores (i spoke something about reimbursements, that goes off now) ~ 800 crores. (jump of almost 250% huge huge )

  • - We all care about the bottomline, right. How it flows to the bottom line? Split the 650 crores in two parts, one is IRCTC and another is Indian Railways (325 crores each). Now deduct 88 crores from this 325 crores. You get about 237 crores additional profit before tax, and now deduct the tax which will be 25%. You added about 180 crores to the bottomline (there are no additional major costs for selling more tickets from the same ticketing platform, right, thats what we love about these businesses), with just one signature on a revised notification. (this is how it happens in railways)


4. What is in it for us?

  • - Now suddenly the 19x earnings which was being offered by the company, turns to lucrative  11x earnings. 

  • - Additional free cash flows for sure. Free cash flows of 490 crores were reported in FY19. Now we expect these FREE cashflows to go upto 700-720 crores for FY21. And one more cherry, it has about ~1100 crores cash. 

  • - Here there's an opportunity to get a business at a very attractive valuation of 5.8% free cash flow/Enterprise Value Yield.  


Now the Sad Part !

  • - Are we buying the IPO, most probably no! Par Itna attractive hai…
  • - Grey Markets are already pricing in a premium of 210-250 rs per share, so the listing is expected around 530-580 rs per share.(450-480 tak aaya, we can get in for cool 30%)
  • - One thing we have to understand here, Indian Railways has historically been a bad allocator of capital. This great cashflows of IRCTC business would be used for commoditized businesses like running a water plant, corrupt catering service, being a travel operator. And now lately, operating a private train on the Indian Tracks, its going to be a challenge!
  • - Rail Official signatures on Important notifications is a dangerous business for IRCTC. (One shot revenue of 500 crores gone and another shot its back! Also catering policy 2017, which was to reduce the revenue loss be reversed, another big shot on Top-line)
  • - We expect it to trade around 18-22 times earnings, so effectively the market cap will be around 8000-10000 crores upon listing, and there will be a stretch in valuations post listing, it can go till 750-800 also, who knows? We’ll touch it, if the valuations and growth is good for us.

Client 04, Oct 19

Subject: PSU disinvestment going forward

Hi Amit,

this government is pushing psu strategic sales in a very bold manner. i want to know, how do you see, this step bringing about changes in indian economy. 

apart from the government meeting disinvestment target and then reinvesting in social or infra sector, how this privatization spree will alter the course for sectors and existing private players. like in the case of CONCOR, once the privatization of CONCOR is done, then railways will not have any proxy in the market, they have to treat other players at par and then we will see the real opening up of freight sector. Similarly many sectors that were open up previously were monopolized by PSUs as they get preferential treatment from ministeries and are often selected/nominated for huge projects. now there will be open tender and the market will determine who will survive and who will not.

in light of this do you think there could be some sectors which will get positive development.

thanks and regards

Admin Reply 02, Nov 19

Hi Sir,

History Suggest Big Money is Made on PSU Divestments - 


BALCO(government Aluminium Company) was taken over by Vedanta for 550 Crores in 2001, today BALCO's valuation is about 14000 Crores and Dividend is more than 1500 Crores.


Vedanta took over Hindustan Zinc at 600-700 Crores 18 year back, today the Valuation of Hindustan Zinc is 1 Lakh crores and Dividend is 12000 Crores. Hindustan Zinc has already given more than 50,000 Crores as dividend.


I am looking at these things closely though the odds, We need to see the New Promoter because the Runway for these stocks is 10-20 Years if sold as most of them are monopolies!

Client 01, Oct 19

Subject: Downside Risk to the Market - Exit Plan

Hi Amit,

Below are my observations of what is hapenning in India. Would love to hear your comments on what your views are on the below points. 

I read the article https://www.indiatoday.in/india/story/india-housing-mess-projects-stalled-1575926-2019-08-01 and it seems pretty disturbing. This is just one part of the country, there are many such examples across India. Most of them who have invested in these houses would be paying EMI along with the rent on thier current accomodation. This is could be one of the reasons why we see demand crunch in auto and other sectors in the market.

Houses have become unafforable in India with affordable houses advertised by leading real estate developers (godrej prop, shobha) to be in the price range of 1-1.5 cr. Many of their inventories are also unsold due to the purchasing power of a comman man. Salaries have not risen at par with the rising rates of daily used items.

With de-monetisation and GST - many small scale companies had to shut shop thereby causing job loses for people emplyed from rural india who returned back home and do not have money to feed. Therby reducing the dmand for Parle-G biscuits soaps etc in rural India. This is inturn leading to a cycle.


Coming to the main question I wanted to ask.. Do you think the realty mess is going to take India down? What do you think is a strong support at NIFTY levels. Do you think there is a possibility of 2008 like crash arising? I know its difficult to predict, but how can Nirmala stand holding the NIFTY line up like that (loved the image you used for the Nirmala PUT blog :D) but in the event if such a thing happens how would we ensure we either liquidate our portfolio with minimal loss or will high quality survive in such a scenario- I doubt it would? We would need to have a plan.

Not being too pessimistic but we need to be sure we protect our capital.

Admin Reply 02, Nov 19

Hi Sir,

Global GDP Growth has been 2% For last 10 years, but you had a Google who has Created a Consumer monopoly & Grew at 25%.. We have to bet on business who are not fighting anymore.. Lets take an Example of Google, it used to fight with a lot of players in the competative software product business.. What google did is build Andriod & now instead of competiting with all other software product companies, he partnered with them to create a Monopoly.. 


Look at Google Maps, Uber, OLa, Zomato are all build on it. Basically the New world of Business will take over the Old World of Business & thats where large wealth Creation will happen.. If you see what Ola, Uber, Zomato have created is basically they have created Entreprenuers (Delivery Boys & Drivers) on their Ecosystem & Rebuilding this ecosystem is Impossible again.. 


My Job is not see that the World will grow at 1.5 or 2.5%, it doesnt matter much, Our Job is to make a Portfolio of entreprenuers who are creating Great Business model. Growing Fast & Understand the game well!

Client 27, Sep 19

Subject: Goodyear review

hi Amit,

Goodyear isa market leader in the domestic farm equipment tyre space and possess one of the best B/S amongst its peers.With a decline in domestic rubber prices, as well as, upgradation in earning estimates .Can we accumulate it on decline for long term wealth creation.

Admin Reply 02, Nov 19

Hi Sir,

Good Year is a Superb Bet on Tyre Story in India but they are not showing any greed for Growth.. Absolutely Fantastic B/S but You need P&L Growth also.. I See India Moving from 2.5 Trillion to 5 Trillion$,

Rule Number 1 - Avoid Permanant Loss of Capital 

Rule NumbEr 2 - Get Decent Returns on Our Investments.. 


I like GoodYear but FOr now i have better Options to Play with.. Look at HDFC Bank, If i could i would increase my Weights from 7-8% to 10% here, If you see this is now at 4x P/B & ROE will be 20% Next Quarter Onwards.. Theorically a 20% ROE HDFC BAnk should be Valued at 5x Book, Gives us a Superb Upside optionality, Though if i am wrong & ROE Remains at 18% we will still compound at 18%.. 

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